Thursday, June 26, 2008

Wednesday, at an NGA workshop ('High speed Europe ...') in Brussels, ECTA presented a WIK Consult report on FTTH. Based on case studies for 6 countries (DE, FR, ES, IT, PT, SE), they conclude that incumbents only can do FTTH, on a large and profitable scale.

The main points:

Incumbents have both the infrastructure (available for re-use or closure) and the customer bases to make it possible in a profitable way (RoC = 10%), through a 30% cost advantage over altnets.

Large-scale replication is not economically viable for altnets, outside very densely populated areas or in places like Paris (with its famous open access sewer system).

The network must be open access, because all this implies that rolling out FTTH by incumbents bears the risk of re-monopolizing the telecom market. Duct access is not enough. Unbundled fiber (from Metro Core Locations) could allow for more altnets than unbundled copper. Sharing with altnets right from the start reduces the cost to incumbents.

Access regulation has to change from 'how to provide access' to 'how to structure new network elements'. A form of 'fiber subloop unbundling' is only possible for point-to-point fiber.

Does the report imply the obvious: we need just a single FTTH network?

If full replication is not viable, the question remains: at which level do we need competition? (Take the poll in the right hand column!)

How about cable competition: does that count as network replication? The 6 countries mentioned all have cablecos, but with diverging coverage. What happens once they start rolling out FTTH?

Does the case still stand in a country like France, where altnets are cherry-picking high-density geographies?

This fits nicely with our 'incufiber' stance, which we were able to present in Rome earlier this month. We proposed structural separation as a way to maintain a proper level of competition. The advantages include:

True equivalence between SPs.

The ablity to attract (state) funding.

Avoid more than one FTTH networks being built.

And there were more FTTH goodies:

Viviane Reding (EC) proposed a 15% 'risk premium' for NGA builders in a speech that wasn't all too different from a previous one. So far, it's not clear what this means exactly. However, the message is clear: true infrastructure-based competition is favoured. Now, if the incumbents aren't supposed to re-monopolize the market (since only they have the scale for nationwide FTTH roll-out), there must be open access and true equivalence: all service providers (including SPs belonging to the incumbent) should have identical terms for accessing the network.

Telecom Italia calls for increased NGN investments through PPPs. Partnering is the way to go.

Vodafone considers entering the fiber game. It starts to look more and more as if Vodafone wants to be a full-service provider (integrating Arcor, bidding for Ghana Telecom, launching BB, etc.). Are they, sort of, going the Tele2 way (consolidating some markets, exiting others)?

SFR targets 5m homes passed by 2012. It remains to be seen how France can reach nationwide coverage.